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Under a settlement tentatively approved in New York on Friday, Santa Barbara’s Clark Estate, known as Bellosguardo, would become an arts foundation — unless the IRS throws in a monkey wrench.

If the IRS refuses to forgive $16 million to $18 million in penalties on the late Huguette Clark’s $300 million fortune, the hilltop property on East Cabrillo Boulevard might have to be sold, according to NBC News investigative reporter Bill Dedman.

The settlement, which could be signed by a judge there Monday, calls for preservation of the property, as called for in Clark’s will. But unless the IRS is willing to waive the penalties, Bellosguardo might have to be sold to make the settlement involving other entities work, Dedman said. Because Clark, who died in 2011 at age 104, was so generous with friends and staff, her estate owes the IRS $84 million in gift taxes, with penalties estimated at $16 million to $18 million.

Her distant relatives, most of whom had never met her, will receive over $30 million.

“If the IRS insists on collecting the penalties, that bill will lower the amount flowing to the (arts) foundation and could require it to sell the California property,” Dedman said.

Agreed; the IRS should not waive the fines. Sounds like her financial advisers failed in their duties. Also, if it is sold, the property taxes paid to the City of SB would probably be higher than if it is held by a non-profit arts foundation.

You better believe it. If that place were sold, it wouldn't go for a dime less than $50M. Even at that price, it would be about $560K annually in property tax alone. Considering they likely currently pay less than $10K annually in property tax, that's quite an increase.

The IRS generally forgives penalties when there was no intent to defraud. Personally, I hope that this beautiful estate becomes an art museum. That would benefit the community a lot more than another private mansion for a billionaire.